NEW DELHI, Nov 17: Indian Finance Minister Palaniappan Chidambaram said on Wednesday growth may slow to between six and 6.5 per cent this fiscal year due to patchy monsoon rains and high global oil prices.
India's economy expanded 8.2 per cent in last fiscal year to March 2004, the fastest rate in more than a decade, as good monsoon rains boosted farming incomes in the agriculture-dependent nation.
Whilst a 6.0-6.5 per cent growth rate would be considered very respectable by many, India would still lag behind China which recently forecast growth of some nine per cent this year.
"Deficient rainfall in some parts of the country and the unprecedented hardening of international crude oil prices are likely to moderate output growth," said Mr Chidambaram.
The growth forecast by the finance minister is consistent with an October Reserve Bank of India forecast. The central bank raised its short-term lending rate last month by 0.25 percentage points to 4.75 per cent in an effort to slow inflation caused by high oil prices.
"This is consistent with our analysis as well," Mr Chidambaram said, adding: "I wish to point out that any growth above six per cent should be considered good in a tough year." Economists say long-term double-digit expansion by Asia's fourth largest economy is vital to bring about a substantial fall in the number of people living in poverty. -AFP
